Master the Theory of Demand

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Questions and Answers

According to the Theory of Demand, what is the relationship between the quantity demanded of a commodity and its price?

Inversely related (correct)
Directly related
Not related at all
Sometimes related

What does the Theory of Derived Demand explain?

The relationship between quantity demanded and price
The factors affecting demand
The demand curve
The application of demand theory (correct)

What is the definition of demand?

The quantity of a commodity that a consumer is capable of buying and is willing to pay the given price for, at the given time
The quantity of a commodity that a consumer is capable of buying and is willing to pay the given price for (correct)
The quantity of a commodity that a consumer is capable of buying
The quantity of a commodity that a consumer is willing to pay the given price for

What is the Theory of Demand?

A law that states the relationship between quantity demanded and price (D) Signup and view all the answers

What does the Law of Demand state?

The quantity demanded of a commodity is inversely related to its price (B) Signup and view all the answers

Which one of the following is the correct definition of demand?

The quantity of a commodity that a consumer is capable of buying and is willing to pay the given price for it at the given time. (C) Signup and view all the answers

Which one of the following is NOT a factor affecting demand?

Price of the commodity (B) Signup and view all the answers

According to the Law of Demand Theory, what is the relationship between the quantity demanded of a commodity and its price?

Inversely related (A) Signup and view all the answers

What does the Theory of Derived Demand explain?

The demand for a product that is derived from the demand for another product (B) Signup and view all the answers

What does the Demand Curve represent?

The relationship between the quantity demanded of a commodity and its price (D) Signup and view all the answers

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Study Notes

Demand Theory

The Theory of Demand explains the relationship between the quantity demanded of a commodity and its price.
The Law of Demand states that as the price of a commodity increases, the quantity demanded decreases, ceteris paribus (all other things being equal).

Derived Demand

The Theory of Derived Demand explains that the demand for a resource, such as labor, is derived from the demand for the goods and services it produces.

Definition of Demand

Demand is the quantity of a commodity that consumers are willing and able to purchase at a given price level during a particular period of time.

Factors Affecting Demand

The following are factors that affect demand: consumer preferences, income, prices of related goods, population, and consumer expectations.

Demand Curve

The Demand Curve represents the various quantities of a commodity that consumers are willing and able to purchase at different price levels during a particular period of time.